Oil prices rise after US and Iran exchange attacks

The news: Brent crude oil was trading about 5% higher at USD78 on Wednesday night after US President Donald Trump said the interim ceasefire with Iran was “over”. Prices initially jumped over USD79 on his comments before easing.

The context: Oil prices have fallen about 30% since the end of April as traders priced in the prospect of a ceasefire agreement and a reopening of shipping through the Strait of Hormuz. Prices briefly returned to pre-war levels of about USD72 earlier this week, but rose again after the US and Iran exchanged missile and air strikes. The US Treasury also revoked a waiver which allowed Iran to sell oil on the open market.

What they are saying: Jorge Leon, a senior geopolitics analyst at Rystad Energy, said the flare-up had damaged confidence that the 60-day truce would evolve into a permanent peace agreement. “Tanker traffic through the Strait of Hormuz has essentially stopped, which tells you more about risk perception right now than any statement from Washington or Tehran,” he said in a press release.